It's a Good Thing Prices Are Second to Reliability
Although price probably will be the most important factor
influencing energy decisions after this winter, it is the other
things, such as reliability and customer service, that so far have
determined the winners and losers in the gas sales business,
according to a new survey by RKS Research & Consulting.
A majority of American businesses say reliable supplies and good
service remain the most important factors in their gas purchasing
decisions, RKS said after interviewing about 800 energy purchasing
managers for large endusers during the months of May and June.
Only the largest transportation clients - those who pay brokers
or marketers for delivered gas - shop solely on the basis of price,
according to the survey. These transportation clients gave higher
satisfaction ratings to marketers compared to regulated local gas
"These scores indicate that business customers are reducing
natural gas to a commodity purchase, a perception that fails to
distinguish one supplier from another," said Rick Ginter, RKS
director of research and project leader for this survey. "Those
suppliers that add services in such areas as energy management,
consulting and billing and increase their customer communications
stand the greatest chance to preserve and grow market share."
The Year 2000 Natural Gas Business Customer Survey includes the
details of telephone interviews with 106 transport clients, and 694
commercial and industrial sales customers who depend on a single
gas utility for energy supply and services.
The survey indicates rising interest among business customers in
additional gas-fueled products. For instance, six in 10 commercial
transport customers find appeal in gas-powered air conditioning,
while half the industrial transport customers are intrigued by
on-site electricity generation.
This survey is RKS' third in-depth poll of corporate purchasers
of natural gas in the last five years. It reveals striking
differences between sales and transport customers. For example,
while all customer segments agree that the guarantee of a reliable
gas supply is their most important purchase criterion, transport
clients place price next in importance. In contrast, sales
customers place price behind supplier honesty and fulfillment of
its service obligation.
More than half of the businesses surveyed now have the option to
choose their gas suppliers, according to the RKS data. Among all
business customers interviewed by RKS, 13% reported switching gas
suppliers. Nearly half of these respondents - 48% - say they are
now paying lower prices for their natural gas.
Transport customers also remain the most critical market
segment, according to the survey. For example, more than half - 52%
- of commercial transport customers feel they pay too much to their
local gas distributor. A third of transport customers rate their
marketers high in value received. And only a quarter - 23% - see
their local distribution company as more than a source of natural
gas and remain critical of their local supplier's business
A quarter of transport clients say that switching or dividing
energy supply from delivery has increased their administrative
burden. Sales customers cite the extra workload as a major reason
for not switching or unbundling suppliers.
"This finding may actually create opportunities for
distributors," said Ginter. "Taking the lead to combine billing
statements, creating transparent systems and assigning a single
point of customer contact may all help to raise profile of the
For copies of the study contact Joan Eckels at (914) 277-6900,